“Bad faith” in insurance claims handling refers to an insurer’s unreasonable and unfair actions in processing or denying a claim. In Hawaii, an insurer has a duty to act in good faith and deal fairly with its insured. Examples of adjuster actions that could constitute bad faith include: unreasonably delaying claim investigation, denying a claim without proper investigation, misrepresenting policy provisions, failing to promptly settle claims where liability is reasonably clear, and compelling insureds to initiate litigation to recover amounts due under the policy. HRS § 431:13-103 outlines unfair claim settlement practices, which can form the basis of a bad faith claim. Case law, such as Best Place, Inc. v. Penn America Ins. Co., further defines the scope of an insurer’s duty of good faith in Hawaii. A claimant can pursue a claim for bad faith in addition to the policy benefits if the insurer breaches this duty.

Licensed insurance adjusters in Hawaii are required to complete continuing education (CE) to maintain their licenses. The specific requirements are detailed in the Hawaii Administrative Rules (HAR) Title 16, Chapter 99. Generally, adjusters must complete a certain number of CE credit hours biennially. These hours must be in courses approved by the Hawaii Insurance Division and related to insurance principles, practices, laws, or ethics. Failure to meet the CE requirements can result in license suspension or revocation. The exact number of required credit hours and the specific types of qualifying courses are subject to change, so adjusters should consult the most current version of HAR Title 16, Chapter 99, and the Hawaii Insurance Division’s website for the most up-to-date information.

“Waiver” and “estoppel” are legal doctrines that can prevent an insurer from denying coverage based on policy conditions. Waiver occurs when an insurer voluntarily relinquishes a known right. Estoppel arises when an insurer’s conduct leads the insured to reasonably believe that coverage exists, and the insured relies on that belief to their detriment. For example, if an adjuster, knowing of a policy violation, continues to process a claim without reservation, this could be construed as a waiver of the insurer’s right to deny coverage based on that violation. Similarly, if an adjuster assures an insured that a claim is covered, even if it technically isn’t, and the insured incurs expenses in reliance on that assurance, the insurer may be estopped from denying coverage. Hawaii case law, such as MP Partners v. Pacific Ins. Co., provides guidance on the application of these doctrines in insurance disputes.

When an insurer is uncertain whether coverage exists for a claim, it may issue a “reservation of rights” letter to the insured. This letter informs the insured that the insurer is investigating the claim but reserves its right to deny coverage later if it determines that the policy does not apply. The reservation of rights letter must be clear, unambiguous, and timely. It should specifically identify the policy provisions that may preclude coverage and explain the reasons for the insurer’s concerns. An inadequate reservation of rights letter can have significant consequences for the insurer. If the letter is deemed insufficient, the insurer may be estopped from denying coverage, even if a valid basis for denial exists. The specific language required in a reservation of rights letter is not explicitly defined in Hawaii statutes, but case law emphasizes the need for clarity and specificity.

“Betterment” in property insurance refers to improvements that increase the value of property beyond its condition before a loss. In Hawaii, insurers are generally not required to pay for betterment. If repairs result in betterment, the adjuster must determine the extent of the increased value. One permissible method for addressing betterment is to deduct the value of the betterment from the claim payment. For example, if a new roof is installed to replace a damaged roof, and the new roof has a longer lifespan than the old roof, the insurer may deduct the value of the extended lifespan from the claim payment. Another approach is to use depreciation to account for the age and condition of the damaged property before the loss. The specific method used should be fair and reasonable and comply with the terms of the insurance policy and Hawaii law.

To become a licensed insurance adjuster in Hawaii, applicants must meet specific qualifications outlined in the Hawaii Revised Statutes (HRS) Chapter 431 and the Hawaii Administrative Rules (HAR) Title 16, Chapter 99. Generally, applicants must be at least 18 years old, be of good character and reputation, and meet certain education or experience requirements. The licensing process typically involves passing an examination administered by the Hawaii Insurance Division or its designee. The examination covers topics such as insurance principles, claims handling procedures, and relevant Hawaii laws and regulations. After passing the examination, applicants must submit an application for licensure, along with the required fees and supporting documentation. The application process may also include a background check. The specific requirements and procedures for adjuster licensing are subject to change, so applicants should consult the most current version of the HRS and HAR and the Hawaii Insurance Division’s website for the most up-to-date information.

“Subrogation” is the legal right of an insurer to pursue a third party who caused a loss to the insured, in order to recover the amount the insurer paid to the insured. In Hawaii, subrogation allows the insurer to “step into the shoes” of the insured and assert the insured’s rights against the responsible party. When handling a claim where subrogation may be possible, the adjuster must take steps to protect the insurer’s subrogation rights. This includes: investigating the cause of the loss to identify potentially liable third parties, notifying those parties of the insurer’s subrogation interest, preserving evidence related to the loss, and obtaining a subrogation agreement from the insured. The insured has a duty to cooperate with the insurer in pursuing subrogation. Failure to protect the insurer’s subrogation rights can result in the insurer losing its ability to recover its payments from the responsible party.

“Bad faith” in insurance claims handling refers to an insurer’s unreasonable and unfair actions in denying or delaying payment of a legitimate claim. In Hawaii, HRS § 431:13-103 outlines unfair claim settlement practices, which can form the basis for a bad faith claim. Examples of adjuster actions that could be construed as bad faith include: failing to promptly investigate a claim, misrepresenting policy provisions to avoid coverage, failing to acknowledge and act reasonably promptly upon communications regarding claims, denying a claim without conducting a reasonable investigation, and failing to affirm or deny coverage within a reasonable time after proof of loss requirements have been completed. The Unfair Claims Settlement Practices Act (HRS § 431:13-103) directly influences the determination of bad faith by establishing specific standards of conduct for insurers. Violations of this Act can be used as evidence of bad faith in a lawsuit against the insurer. The claimant must demonstrate that the insurer’s conduct was unreasonable and caused damages.

When handling a property damage claim involving a condominium association in Hawaii, a licensed insurance adjuster has a duty to investigate the claim thoroughly, determine coverage under the applicable policy, and fairly adjust the loss. Crucially, the adjuster must carefully review the condominium’s governing documents, including the declaration, bylaws, and any relevant rules and regulations. These documents outline the responsibilities for maintenance and repair between the association and individual unit owners. HRS Chapter 514B, the Hawaii Condominium Law, provides the legal framework for condominium governance. The adjuster must understand how this law interacts with the condominium’s specific documents to determine who is responsible for repairing the damage. For example, the declaration might specify that the association is responsible for damage to common elements, while individual unit owners are responsible for damage within their units. The adjuster must also consider any applicable deductibles and how they are allocated between the association and unit owners. Failure to properly interpret these documents and the law can lead to improper claim handling and potential legal liability.

Insurable interest is a fundamental principle of insurance law, requiring that the insured party have a legitimate financial interest in the insured property or risk. In Hawaii, as in other jurisdictions, an insurable interest must exist at the time the insurance policy is purchased and at the time of the loss. An insurable interest exists when the insured would suffer a financial loss if the insured property were damaged or destroyed. Examples of insurable interest include: owning a home, holding a mortgage on a property, or having a leasehold interest in a building. Conversely, an insurable interest does not exist if a person has no financial stake in the property, such as insuring a neighbor’s house without their knowledge or consent. If an insurable interest is lacking, the insurance policy is generally considered void and unenforceable. The policyholder would not be entitled to collect on any claims, even if the loss occurred. The requirement of insurable interest prevents wagering on losses and reduces the moral hazard associated with insurance.

Licensed insurance adjusters in Hawaii are required to complete continuing education (CE) courses to maintain their licenses. The specific requirements are detailed in the Hawaii Administrative Rules (HAR), specifically HAR § 16-93-111. These rules specify the number of CE hours required per licensing period, the types of courses that qualify for CE credit, and any specific subject matter requirements (e.g., ethics, Hawaii-specific laws and regulations). Failure to meet the CE requirements can result in disciplinary action by the Hawaii Insurance Division, including suspension or revocation of the adjuster’s license. To ensure compliance, adjusters should track their CE credits throughout the licensing period, take courses from approved providers, and maintain records of completed courses. The Hawaii Insurance Division provides resources and information on approved CE providers and course offerings. Adjusters should also be aware of any changes to the CE requirements and plan accordingly.

Subrogation is the legal right of an insurer to pursue a third party who caused a loss to the insured, in order to recover the amount of the claim paid to the insured. In essence, the insurer “steps into the shoes” of the insured and can assert any rights the insured may have against the responsible party. For example, if a driver negligently causes a car accident that damages an insured’s vehicle and property, the insurer pays the insured for the damages. The insurer then has the right to sue the negligent driver to recover the amount paid to the insured. In a property damage claim in Hawaii, if a contractor’s negligence causes a fire that damages an insured’s home, the insurer can subrogate against the contractor to recover the claim payment. The adjuster’s responsibilities in protecting the insurer’s subrogation rights include: identifying potential third-party liability, preserving evidence related to the loss, notifying the potentially liable party of the insurer’s subrogation interest, and cooperating with the insurer’s legal counsel in pursuing the subrogation claim. Failure to protect subrogation rights can result in the insurer losing the opportunity to recover its claim payment.

A “reservation of rights” letter is a communication from an insurer to an insured, informing the insured that the insurer is investigating a claim but reserving its right to deny coverage at a later date if certain conditions are not met or if coverage is not applicable under the policy. An insurer might issue a reservation of rights letter when there is a question about whether the policy covers the loss, such as when the cause of the loss is unclear or when there is a potential policy exclusion that may apply. The letter typically outlines the reasons for the reservation of rights and advises the insured to take steps to protect their interests, such as retaining their own legal counsel. In Hawaii, the issuance of a reservation of rights letter creates a potential conflict of interest between the insurer and the insured. The adjuster must be particularly careful to act fairly and impartially, and to avoid taking any actions that could prejudice the insured’s rights. The insured has the right to accept the reservation of rights and cooperate with the insurer’s investigation, or to reject the reservation of rights and pursue their own legal remedies. Relevant Hawaii case law may address the specific requirements for a valid reservation of rights letter and the duties of the insurer in such situations.

Insurance adjusters in Hawaii are expected to adhere to high ethical standards in their professional conduct. Ethical considerations include avoiding conflicts of interest, maintaining confidentiality of client information, and dealing fairly and honestly with all parties involved in a claim. A conflict of interest might arise if an adjuster has a personal relationship with a claimant or a vendor involved in the claim. In such a situation, the adjuster should disclose the conflict to their supervisor and recuse themselves from handling the claim. Confidentiality is paramount; adjusters must not disclose any non-public information about the insured or the claim to unauthorized parties. Fair dealing requires adjusters to treat all claimants with respect and impartiality, regardless of their background or the nature of their claim. An ethical dilemma might arise if an adjuster suspects that a claimant is attempting to commit fraud. In this case, the adjuster has a duty to report the suspected fraud to their supervisor and to cooperate with any investigation. While Hawaii may not have a specific “Code of Ethics for Insurance Adjusters” formally titled as such, adjusters are expected to adhere to general principles of ethical conduct and to comply with all applicable laws and regulations.